Exit Strategies

Moving on to the next challenge

You have successfully grown a business that has a proven track record of growth in revenues and profitability. You now want to capitalise on the position that your company is in and realise your investment. The time has now come for you to take a step back from either the ownership, or the day-to-day management of the business, or both.

Preparing for an exit

Selling a business is one of the biggest decisions you will make. To maximise the value of the sale, it is vital that you are in control of the process from the very start of it. It is important that preparing for an exit begins early. You need to ensure you have all the information available to make informed decisions.

Exit strategies

It can be daunting to choose the right exit strategy for your business. Some exit structures are outlined below.

Personal holding companies: Exiting through the use of a personal holding company can be efficient from a tax perspective provided certain conditions are met. If no relief is available, the business owner is taxed on CGT at 33% on any gain made on the disposal

Entrepreneur Relief: If the conditions for entrepreneur relief are met, individuals may avail of a reduced CGT rate of 10% on the first €1 million of the consideration. Gains in excess are subject to CGT at 33%

Retirement Relief: This may be an option to extract cash on exit tax efficiently provided relevant conditions are met

Liquidation: In circumstances where a trading company is liquidated, a CGT rate of 33% applies

Other considerations

When considering your exit strategy, it is important to consider due diligence and confidentiality aspects of a potential sale.

Due diligence

Carrying out a comprehensive due diligence on your business is usually required by buyers. It can be done in relation to financial, operational, legal and tax matters. Prospective buyers are likely to insist on their own due diligence to understand the risks of the business they are acquiring.

You might consider carrying out your own due diligence to assess any potential risks which can be remedied in advance of the sale process.

Confidentiality

Confidentiality

As part of a sale, it will necessary to get confidentiality agreements in place as business owners usually want to keep the fact that they are selling private. However, to get offers from potential buyers, it is necessary to present the business to parties who have signed a confidentiality agreement to get the best price for your business.